One Service Provider Generating Savings for Another
Outsourcing service providers understand how outsourcing can help their business. That's why they are pretty picky when they select a service provider to outsource non-core areas of their own businesses. This is the story of how one service provider helped another deliver the best possible benefits to its customers.
TXU Energy is an energy services company and retailer based in Dallas, Texas. One of its services is providing energy information to its corporate clients. As any homeowner who has watched his electricity bill climb with the mercury knows well, energy is "one of the largest spends of any organization," according to Bert Robinson, director, Energy Information Systems for TXU Energy. He estimates that energy costs can burn up as much as 10 percent of an operating budget. Then, billing departments can spend another scarce resource -- time -- trying to track data; monitor and validate rates; and detect and resolve billing errors.
Robinson says companies can become more energy efficient by finding a way to reduce consumption and improve efficiency. One way to do this is to outsource energy bill payment to TXU Energy. The service provider pays the bill captures the billing information and builds a usage database. TXU analyzes the situation, studying historical data and current usage, to provide executives with the information they need to determine their options. TXU presents the images of the bills and a variety of reports via the Web on a daily basis.
Managing TXU's Back Office
TXU turned to SourceNet Solutions, a College Station, Texas service provider that specializes in bill payment, to provide its back office services. SourceNet employees receive the bills from TXU's outsourcing clients and either key in or scan the information into the TXU database - working from that point forward with electronic images of the bills. SourceNet pays the bills - gas, water, and electricity - and handles all quality assurance and exception processing identified by over 30 electronic audits of the bills.
"We don't do the bill paying in-house because we couldn't compete with the capabilities of SourceNet. Our core competency is energy and SourceNet's core competency is paying bills efficiently," says Robinson. He says SourceNet could pay the bills cheaper than he could; he estimates SourceNet shaves 10 percent from his cost. But what was really crucial was TXU "couldn't keep up with the technological advances." SourceNet, on the other hand, is on the cutting edge.
"It's been a good marriage," says Robinson.
Retail chains are also discovering outsourcing their energy bills to SourceNet keeps dollars from going out the door. Dan Reiff, senior vice president of business development for SourceNet, explains that many retail chain corporate offices ask their individual stores to pay the energy bills themselves. When SourceNet takes over the job for the entire corporation, "we become an agent of change by consolidating all the corporation's energy billings into one central bill. We find and correct errors in one of every three bills," the SourceNet executive reports.
Reiff says without the knowledge lurking in those energy bills, "corporate officers make decisions on better utility rates and feasible energy efficiency projects on emotion and gut feel." Knowledge becomes even more important as states deregulate their utilities.
Adding energy to its roster of services was a natural, Reiff says, since SourceNet's core competency is accounts payable. "Energy bills are just a critical payable that needs a bit more attention than a normal bill," he explains.
Lessons from the BPO Outsourcing Journal:
- Outsourcing is an effective business tool because the outsourced task is a core competency for the service provider. Even outsourcing providers outsource part of their service offering because the experts can do it better.
- Outsourcing allows buyers to benefit from new technology that it could never have the time or money to afford.
- Outsourcing energy allows the service provider to become an agent of change when many units consolidate their bill paying through the outsourcer.